Adobe Q1 Earnings Beat Estimates, Revenues Up Y/Y, Shares Fall

Adobe ADBE reported first-quarter fiscal 2026 non-GAAP earnings of $6.06 per share, beating the Zacks Consensus Estimate by 3.06% and increasing 19.3% year over year.Total revenues were $6.398 billion, which beat the consensus mark by 1.86% and increased 12% year over year on a reported and 11% on a constant-currency (cc) basis. Annualized recurring revenues (ARR) at the end of the first quarter of fiscal 2026 were $26.06 billion.Adobe shares were down 8.15% at the time of writing this article. ADBE dropped 31.6% in the past year, underperforming the Zacks Computer and Technology sector’s return 31.9% and the Zacks Computer Software industry’s drop 1.7%.ADBE’s Top Line in DetailSubscription revenues were $6.198 billion (which accounted for 96.9% of the total revenues), up 13% on a year-over-year basis. Product revenues totaled $90 million (1.4% of the total revenues), down 5.3% year over year. Services and other revenues were $110 million (1.7% of the total revenues), down 19.1% year over year.Customer Group subscription revenues were $6.17 billion, up 13% year over year and 12% at cc. Business Professionals and Consumers’ subscription revenues were $1.78 billion, which represents 16% year-over-year growth on a reported basis and 15% at cc. Creative and Marketing Professionals subscription revenues were $4.39 billion, up 12% year over year on a reported basis and 11% at cc. Adobe Inc. Price, Consensus and EPS Surprise Adobe Inc. price-consensus-eps-surprise-chart | Adobe Inc. Quote ADBE Q1 Operating DetailsAdobe reported first-quarter fiscal 2025 GAAP gross margin of 89.6%, which expanded 50 basis points (bps) on a year-over-year basis.Operating expenses were $3.32 billion, up 13.2% year over year. As a percentage of total revenues, operating expenses increased 60 bps year over year to 51.8%.The adjusted operating margin was 47.4%, which contracted 10 bps year over year.ADBE’s Balance Sheet & Cash FlowAs of Feb. 27, 2026, the cash and short-term investment balance was $6.89 billion, up from $6.6 billion as of Nov. 28, 2025. Long-term debt, as of Feb. 27, was $5.38 billion compared with $6.2 billion as of Nov. 28.Cash generated from operations was $2.96 billion in the reported quarter compared with $3.16 billion in the previous quarter.Adobe Offers Positive Q2 and FY26 GuidanceFor the second quarter of fiscal 2026, Adobe expects total revenues between $6.43 billion and $6.48 billion. Adobe expects Business Professionals and Consumers’ subscription revenue between $1.80 billion and $1.82 billion. Creative and Marketing Professionals subscription revenues are expected between $4.41 billion and $4.44 billion.Non-GAAP operating margin is expected to be 44.5%. Adobe expects fiscal second-quarter non-GAAP earnings between $5.85 and $5.90 per share. For fiscal 2026, Adobe still expects total revenues between $25.9 billion and $26.1 billion. Adobe expects Business Professionals and Consumers’ subscription revenues between $7.35 billion and $7.4 billion. Creative and Marketing Professionals subscription revenues are expected between $17.75 billion and $17.9 billion.Non-GAAP operating margin is expected to be 45%. Adobe expects fiscal 2026 non-GAAP earnings between $23.30 and $23.50 per share.Zacks Rank & Stocks to ConsiderCurrently, ADBE carries a Zacks Rank #3 (Hold).Western Digital WDC, Teradyne TER and Silicon Motion Technology SIMO are some better-ranked stocks that investors can consider in the broader sector. Western Digital, Teradyne and Silicon Motion each sport a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.Long-term earnings growth rate for Western Digital, Teradyne and Silicon Motion is currently pegged at 51.11%, 27.28% and 28.05%, respectively.Just Released: Zacks Top 10 Stocks for 2026Hurry – you can still get in early on our 10 top tickers for 2026. Handpicked by Zacks Director of Research Sheraz Mian, this portfolio has been stunningly and consistently successful.From inception in 2012 through November, 2025, the Zacks Top 10 Stocks gained +2,530.8%, more than QUADRUPLING the S&P 500’s +570.3%.Sheraz has combed through 4,400 companies covered by the Zacks Rank and handpicked the best 10 to buy and hold in 2026. You can still be among the first to see these just-released stocks with enormous potential.See New Top 10 Stocks >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Western Digital Corporation (WDC): Free Stock Analysis Report Adobe Inc. (ADBE): Free Stock Analysis Report Teradyne, Inc. (TER): Free Stock Analysis Report Silicon Motion Technology Corporation (SIMO): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks